Should I File a New W-4 Form?

April 12, 2018 : Mike Slack

The IRS recently announced the release of a new , Employee’s Allowance Certificate. This is the form that employees submit to their employers to use when calculating the amount of income taxes to be withheld from wages. With the recent passage of the Tax Cut & Jobs Act, it is advisable that employees examine their current withholding to determine whether they need to submit an updated 2018 W-4 form to their employers.

 

The primary reason this is a good idea is that the Tax Cut & Jobs Act eliminated the deduction for personal exemptions for individuals, their spouses, and their dependents, and the new Form W-4 reflects those changes.  The old version of the Form W-4 calculated the amount of tax required to be withheld from wages based on the number of withholding exemptions reported on the form. Therefore, an individual with an older version of Form W-4 on file with their employer could face adverse consequences.

 

Luckily for most, earlier this year, the IRS updated withholding guidance and issued new withholding tables to incorporate TCJA’s 2018 rates, brackets, etc. The tables were designed to work with employees’ existing W-4s so that employees with straightforward withholding situations would not be under- or over-withheld for the year.

 

There are still several situations where filing the new 2018 W-4 tax form with your employer is advisable for this year:

  • Families with more than one earner.
  • People with two or more jobs at the same time or who only work for part of the year.
  • People with children who claim credits such as the Child Tax Credit.
  • People with older dependents, including children age 17 or older.
  • People who itemized deductions in 2017.
  • People with high incomes and more complex tax returns.

Of course, it is always good advice to check your withholding at least once a year or whenever your personal circumstances change.

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Questions? Comments? Visit your local tax pro for more information or visit www.irs.gov.

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Mike Slack

Mike Slack

The Tax Institute, H&R Block

Mike Slack, JD, EA, is a senior tax research analyst at The Tax Institute. Mike leads research teams focused on business and investment tax issues.